Tuesday, July 30, 2013

A week ago, the President kicked off his latest campaign at Knox College in Illinois to garner support for his plans to lift a sluggish economy. On Monday, at the Mandarin Oriental in Washington, Mr. Obama gave a preview before an event organized by Organizing for Action, a P.A.C. formed from his last campaign organization – a tax exempt group (meaning that it is, in part, funded by taxpayers regardless of their political preferences) that continues Mr. Obama’s campaign begun more than six years ago. Before an “active and rowdy” crowd of supporters, the President said he would be “trying to get Washington and the press to refocus on the economy…exploring some big and bold ideas.”

However, what he actually said – and it took him over an hour to do so – was a re-hash of policies that have not worked. There was nothing big, nor anything bold. He spoke of income inequality, but offered little in answers other than redistribution. He called for increasing the minimum wage, which tests well in polls and always gets applause, but tends to destroy, not create, jobs. He asked for more money for renewable sources of energy, like wind and solar, despite heavy taxpayer losses in companies such as Solyndra, Abound Solar and A123 Systems. He continued to suppress expectations of approval for the Keystone XL pipeline, despite the jobs it would create and the reductions in dependency on foreign oil that would result. As mentioned, there was nothing new, big or bold.

Mr. Obama made three speeches, in Illinois, Missouri and Florida. In all of them, he said his priority was the middle class. (Remember when President Obama’s 2012 campaign roundly ridiculed Mitt Romney for his focus on the middle class?) He praised how his policies on healthcare, Wall Street, and tax and spending had pulled the country back from the brink of a financial crisis. (In truth, it was the Bush Administration that yanked us back in the late fall of 2008.) Mr. Obama said he could not understand why Republicans blame the Affordable Care Act for job losses when “our businesses have created jobs at nearly twice the pace of the last recovery, when there was no Obamacare.” I don’t know what he is talking about. Given that there are two million fewer people working full time today than when he took office, one can only assume his statistics are only accurate if part-time jobs are included. Thus far in 2013, for example, the number of full-time workers has increased by 80,000 versus 592,000 new part-time workers. Employers are not required to offer part-time employees healthcare.

It is true, as Mr. Obama reminded us, that our infrastructure is suffering. Roads and bridges are in disrepair, as are mass transit systems and airports. Yet the $787 billion 2009 stimulus bill, which promised 3.5 million jobs aimed at fixing the infrastructure, came to naught, because, as the President admitted a year later, “shovel-ready jobs were not shovel-ready.” A principal reason infrastructure spending has declined is because so much of the budget is spent on entitlements. Including food stamps and anti-poverty programs, entitlements comprised 62% of the federal budget last year. They are the fastest growing part of the budget, expanding at twice the rate of inflation, and will only get bigger once Obamacare gets implemented. While deficits continue to expand – albeit at a smaller rate than earlier – interest expense has remained roughly constant because of extraordinary low interest rates. But that won’t last. Interest rates will go up, and if debt has not been cut there will be even less money for discretionary projects. Keep in mind, when the Interstate Highway System was built in the 1950s – the last major infrastructure program – entitlements consumed about 30% of the federal budget. As a nation we have made decisions: We opted for entitlements over infrastructure; we must live with the consequences.

Mr. Obama persistently took Republicans to task for being obstructionists and claimed they had not offered alternatives. That was campaign rhetoric, not an attempt at an honest dialog. He never acknowledged Paul Ryan’s “The Path to Prosperity,” nor the Simpson-Bowles tax plan that he ignored three years ago. Mr. Obama is the President. He cannot continually campaign as an outsider. It is his responsibility to work with a Congress on an economic plan that can gain enough support to pass both Houses. Millions of unemployed Americans are depending on his willingness to work with the Senate and the House.

God knows that the economy needs help, and it needs growth, but should government or the private sector be the engine? Those who pose the choice as between growth versus austerity, as the Europeans do, miss the point. Austerity never works. But how to generate growth? Over the past four and a half years, government has led the charge, which has resulted in a subpar 2% average annual rate of economic growth. Government deficit spending, as David Malpass noted in Tuesday’s Wall Street Journal, “surged 23% in 2009, 20% in 2010, 11% in 2011 and 10% in the year through March.” The Federal Reserve has kept interest rates near zero since the fourth quarter of 2008. Additionally, they have been buying Treasuries and mortgages at the rate of $85 billion a month. The Fed’s balance sheet has expanded from less than a trillion dollars in 2008 to $3.35 trillion at the end of May.

It is time to let the private sector take the lead. Government is nowhere near as efficient an allocator of credit as are individuals and businesses. But doing so requires tax reform and less regulation. Obamacare and an interest-rate scenario that everyone knows must end have created uncertainty. Too often Washington considers itself a source of confidence, when in fact it is a deterrent. Reflecting uncertainty, U. S. Banks, as James Grant notes in his most recent “Grant’s Interest Rate Observer,” have excess reserves of $1.2 trillion. That money could be lent out at a rate of 10:1, suggesting possible loans of $12 trillion. That that money sits idly is a commentary on the hapless policies of the Obama Administration.

Given the dismal economic recovery and the growing scandals that confront this President it is not surprising that he has taken to the hustings. Speaking is what he does best, as long as he has his Teleprompters. Adoring crowds greet the President, all rounded up by his advance people. One wonders, does Chris Matthew still get a thrill in his leg whenever Mr. Obama speaks? His speeches make good theater, but there was little of substance about the economy in his words. But what was most disconcerting was the President’s disregard for the rule of law. At Knox College he said, “I will not allow gridlock or inaction or willful indifference to get in our way.” And at the University of Central Missouri he said, “Sometimes, frankly, I can’t wait for Congress. It takes them a long time to decide on stuff.” In 2009, when a Democratic-led Senate and House failed to pass a cap-and-trade bill to limit greenhouse gas emissions, he employed the Environmental Protection Agency to do so on their own. When Congress did not pass the DREAM Act, allowing undocumented young people to remain in the U.S., he instructed the Department of Homeland Security to allow them to stay. Whether one agrees with the President or not, he is setting a dangerous precedent. A President is supposed to enforce laws enacted by Congress, not choose which ones he will support and which he will ignore.

‘Action August’ is actually a slogan from Organizing for Action, which is discussed in the first paragraph. Their purpose is to push the President’s agenda for his second term and the 2014 midterm elections – Obamacare, immigration, climate change and gun control are their four horsemen. They are all important issues, but notably absent is any emphasis on the economy. With the economy the stakes are much higher. Jobs are needed and the economy needs to get out of its two percent GDP growth rut. In lieu of working with Congress, the Administration has relied on the Fed to keep interest rates low; rather than emphasizing fiscal policy. As Ronald McKinnon of Stanford University points out in an op-ed in today’s Wall Street Journal, the consequence of the Fed’s actions may have had the opposite effect of what was intended. “By trying to stimulate aggregate demand and reduce unemployment, central banks have pushed interest rates down too much and inadvertently distorted the financial system in a way that constrains both short and long-term business investment.” In the meantime, in raising taxes and tightening regulation, the Administration has impeded growth and employment, not abetted it.

We need an ‘Action August,’ but I fear the President will yet again let the economy founder on the rocks of ideology.

Monday, July 29, 2013

Egypt is a country in which 81% of 15-to-19 year-old young women have undergone genital mutilation and where 90% of women wear a headscarf or hijab. It has, for seven years, been a signatory to the U.N. sanctioned Committee on the Elimination of Discrimination against Women (CEDAW). Other member states include such women-friendly nations as Ghana, Saudi Arabia and China. Requirements of signatory states is to “achieve a balance between men and women holding publicly elected positions” and to “modify the social and cultural patterns of conduct of men and women, with a view to achieving the elimination of …stereotyped roles for men and women.” Despite being signed by President Carter, the United States Senate has never approved the agreement, much to the disappointment of many elites on the Left.

Last December the Democrat-controlled Senate, against the urgings of President Obama, blocked ratification of the U.N. Convention on the Rights of Persons with Disabilities (CRPD). Why would a Democratic Senate vote against their President on an issue that is sensitive and sympathetic to disabled persons? And why would the United States, as fair as any country in its treatment of women, not sign CEDAW? The answer lies in skepticism for stealth-like transnationalists – people, as former Senator John Kyl described in an interview with Sohrab Ahmari in the Wall Street Journal, “who are convinced they are right about important issues.” While what they say sounds good and their intentions may be honorable, their methods violate fundamental foundations of our Constitution – the separation of powers, federalism and representative democracy. Better questions would be: Why don’t other nations follow the lead of the United States when it comes to issues such as women’s rights and the disabled? Why should the U.S. follow the lead of non-democratic nations in promoting concepts they don’t practice? It is the hypocrisy and disingenuousness of these global elites that thoughtful people should find troubling.

The term transnationalism dates back to the early 20th Century. It grew out of the heightened connectivity between people and receding economic and social significance of borders between nations. That sense of global unity was challenged with the rise of nationalism, which led to World War’s I and II. Those two wars gave substance to the concept that nations could no longer operate in isolation, but must also be respectful. Thus, was born the League of Nations and subsequently the United Nations, as answers to ruinous nationalism. There is much in transnationalism that is good. It is always better when citizens of different nations and cultures meet and talk rather than fight. In business, transnationalism recognizes the evolving production process, in which various stages of manufacturing can occur in various countries, with the aim of minimizing costs, so as to improve the competitive nature of products.

But it is in the matter of laws, rules and behavior where transnationalists become a risk to our sense of democracy, as in the two treaties cited above – CEDAW and CRPD. How can nations that knowingly mistreat women sign treaties agreeing not to do so? They can because the meaning of the term “state practice” has changed, as it applies in international law. According to Mr. Kyl and two Hudson Institute associates writing in the current issue of Foreign Affairs, “the state-practice requirement can be satisfied with words – that is, by proof not that the states have actually complied with the rule, …but [because] officials have merely spoken in favor of it.” This is what has allowed non-democratic states like Saudi Arabia and Egypt – states that discriminate against women and other minorities – to be signatories to acts like CEDAW and CRFD. It is not what they do; it is what they say. It is the very opposite of moral lessons embedded in Christian-Judeo teachings.

In the same issue of Foreign Affairs, Mr. Kyl, along with Douglas Feith and John Fonte discuss transnationalism. It is seen as an answer to isolationists who have favored a “Fortress America” policy (though the truth is there are very few isolationists anymore.) Proponents see transnationalism as evolving from a growing interconnectedness that should dissolve international boundaries. They claim that “national sovereignty is growing increasingly problematic, impeding the achievement of multinational solutions to public policy issues.” It sounds good, like something a “flat-world” needs. But what it entails is giving up sovereignty – a sovereignty based on the principal that ultimate power resides with the people and the ballot box. In a transnationalist world, power of the people is given up to an elite who purports to know what is best for us. The concept of us American citizens being subject to rules, the making of which we have no direct input is contrary to the very idea of our democracy.

When the British government claimed the right to tax the colonists without their representation in Parliament, American colonialists rose up in revolt. In like manner, why should a sovereign people be subject to non-elected leaders, especially to those whose sense of right and wrong is totally alien to our culture? Should the President of the United States have to sit in judgment by unelected U.N. officials? As incredible as it sounds, that was the finding of American transnationalist, Philip Alston, professor of international law at NYU and the U.N.’s special rapporteur on extra-judicial killings. He had found that Mr. Obama’s use of Drones “untenable,” and that he (the President) was violating international law. No matter what one thinks of Drones or Mr. Obama, it is unthinkable that any President, elected by the American people, should be subject to rules of an organization that does not represent the people of the United States. Our Constitution allows for the American people, through our elected representatives, to remove a President should it be shown that he or she had violated our laws. We should not have to bow to the demands of some outside group.

The G-20 is getting set to back a major overhaul of international taxation designed to eliminate loopholes that enable some large companies to keep their tax bills low. That may be an ideal, but it ignores the fact that tax policy is one way that countries compete. Competition is what generates improvement, in businesses and government. Price fixing, which is what this would amount to, is a short term answer to revenue shortfalls. But it would reduce creativity over the long run, hurting consumers.

The concern of transnationalism is its effect on democracy. The Obama Administrations has already accelerated the trend toward centralized control and away from a government empowered by the people and their representatives. He has appointed more czars than any of his predecessors, and he has empowered agencies run by his appointees who are not subject to Congressional scrutiny, to enact and enforce laws, prime examples being the EPA, HHS and the IRS. He takes pride in the fact. In speeches, he has promised to end-run Congress, if they prove obstructionist. At Knox College last week, Mr. Obama said, if necessary he would use his “executive authority” to bypass Congress to push his agenda. It may be expedient, but it is at odds with the concept of representative democracy. Transnationalists would further isolate us (the people) from those who would make decisions on our behalf – the claim being they are better qualified. It is a form of elitism that was common in 18th Century England and, in fact, in America, when women, Blacks and non-property holders were not allowed to vote. Jon Kyl, in his interview with Sohrab Ahmari, said about transnationalists: “…they are in too much of a hurry to mess with the difficulties of representative government to get their agenda adopted into law – or they know they cannot win democratically. So they look for a way around representative government.”

At its root, transnationalism is an extension of what we see today as an elite comprised of big government, big business, big unions, big banks and mainstream media, all aided and abetted by friends in Hollywood and the entertainment industry. It is a belief in size, that might makes right. It is infested with cronyism, seemingly purified by belief in a ruling class who feel they can make better decisions for the people than the people can for themselves. Non-conformists are seen as a threat, as are entrepreneurs and others that stress the value of the individual over the power of the institution. A manifestation of this attitude can be seen in the government’s decision to indict the hedge fund SAC, despite no criminal activity; yet they encourage policies that have allowed large banks like Goldman Sachs, Citigroup and J.P. Morgan to become even bigger and riskier, despite their need for government bailouts five years ago. This belief in a “ruling class” is in part responsible, in my opinion, for the decline in social and economic mobility in the U.S. Transnationalists tend to trivialize their opponents. Transnationalism is an attitude sanctimonious and dangerous – sanctimonious because leaders are patronizing toward the (supposedly) less-well-informed masses, and dangerous because it stifles initiative and threatens democracy as we know it.

Eight years ago, Tom Friedman wrote a highly successful book, The World is Flat. It was a book that trumpeted globalization and the riches that would accrue to the citizens of the world. He was right. The world’s middle class has increased, helped by the rise of capitalism and the fall of Communism. But the world is not flat. It only appears so to idealists who choose not to differentiate American capitalism from Chinese mercantilism, or democracy in Britain to totalitarianism in Russia. The world, in fact, is curved, bumpy and filled with mirages of false hope that “this time will be different.” It is behavior that matters. It is not idealism that should govern international relations, but realism, skepticism and the promotion of self interest. A flat world assumes that the lion (Russia) will lie down with the lamb (Western Europe.) And it assumes that China and Japan will be “good neighbors.”

Our country has evolved over two hundred years, as conditions changed. Thus far we have held largely true to the fundamentals laid out in the Constitution’s 10th Amendment – “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” There is nothing about extraordinary powers exercised by Presidential appointees. It says nothing about subjecting the people of the United States to laws instituted by some supranational group. The danger of transnationalism is in its subtlety. It is like being tossed into a pot of warm water and gradually brought to boil. By the time you recognize there is a problem it’s too late to get out.

Wednesday, July 24, 2013

P.G. Wodehouse writes deliciously humorous novels (and Money for Nothing is among the better ones) that have nothing to do with the dire situation in Detroit. Yet the title of his 1928 novel seems to sum up Detroit’s predicament: the bankruptcy filing lists $18 billion in unsecured liabilities, including $5.7 billion in retiree healthcare and $3.4 billion to pensions for city employees. Hundreds of thousands of Detroit citizens have paid hundreds of millions of dollars in taxes over the past five decades. Property and income taxes are the highest in the state, with 40% of revenues going toward retirement benefits and debt. What do the taxpayers have to show for the money shelled out? Forty percent of the street lamps don’t work, illiteracy runs at 47%, unemployment is 17.5%, two thirds of the city’s parks have been closed permanently, and it takes an hour for the police to respond to a 911 call. A third of the city has been abandoned. For taxpayers, it has been money paid out for little or nothing in return.

How did we come to this pass? It has been a combination of factors, some self-inflicted, others beyond their control. Detroit was a car city. For decades, the American automobile industry sat fat, dumb and happy, while foreign competitors built and sold better cars – cars people wanted. For the sake of economy, plants moved to the suburbs. City residents followed the jobs, and taxes were raised on those left behind. The UAW didn’t help, but the near death of the American auto industry was more of an attempted suicide than murder. The city was in similar straights. Corruption, greed and ineptness characterized government officials. The city of Detroit hired more workers than comparable cities. Tax dollars were used to satisfy the demands of municipal workers’ unions for unrealistic pension and healthcare benefits, with little concern as to the consequences for the infrastructure of the city that went unattended. A focus on “now” meant ignoring the future.

In Monday’s New York Times, Paul Krugman was essentially dismissive, in terms of a cause. He allowed that while governance was not up to par, “for the most part the city was just an innocent victim of market forces.” Cut from a similar political coat, but with considerably less intellectual acuity, MSNBC’s Melissa Harris offered, “This is what it looks like when government is small enough to drown in.” While I had trouble understanding her analogy, I believe she was referring to the recent rounds of city employee layoffs. She neglected to mention that even with layoffs Detroit employs one city worker for every 55 residents. That compares to one for every 109 residents in Charlotte and one for every 101 residents in El Paso. The first city is slightly larger than Detroit, the latter a tad smaller.

It was not capitalism that failed, as some have claimed. It was the city government. Lawrence Kudlow wrote last Friday in Investors Business Daily, “[The collapse was] proof positive that the public-union collective-bargaining model has utterly failed.” Charging people more to live in a city with fewer amenities and increasingly bad service is not a formula for success, but that is exactly what happened. When things began to go bad decades ago, taxes were raised and services cut, but not benefits or compensation. Last year, with 40% of revenues going toward retirement benefits and debt, the city father’s doubled the city’s business tax. Like an addict, they increased the dose rather than opting for rehab.

In my opinion, there is nothing complex about the cause. The city promised, borrowed and spent more than it could collect. As it raised taxes, people and businesses moved out, leaving behind those that could not afford to do so. Corruption also played a significant role, as it does in most cities. Even after cutting $250 million from its 2012-2013 budget, Detroit city managers still had $1.12 billion to spend. Public employees everywhere are subject to constant bribery proposals. Developers whisper into eager ears about land they have acquired through options. They badger them into enacting tax waivers. Banks push city managers to issue bonds, regardless of a need. Does it surprise anyone when brown paper bags change hands in parking lots? Union leaders agreed to support reelection bids in return for support of the next contract. And money is misspent. Detroit spends more on schools per pupil than the national average, yet has one of the lowest student-performance rates in the country.

What is clear is that Detroit’s revenues cannot support all expenses, including operating expenses, interest payments and benefits to retired workers, let alone investments in infrastructure. What is unclear is whether Detroit will be allowed to file. (The City of Harrisburg, Pennsylvania attempted to file Chapter 9 two years ago, but was ruled ineligible.) And if Detroit does file, it is unclear as to whether federal law or state law will prevail. Federal law prohibits insolvent debtors from discriminating unfairly among classes of creditors, while Michigan’s constitution forbids local governments from diminishing or impairing promised pension benefits. That is a question that could be decided by the Supreme Court. ($9 billion is owed to bond holders, $5.7 billion in health benefits and $3.4 billion in pension assets.) It is unclear how long Detroit would operate under Chapter 9. Orange County, California spent 18 months in bankruptcy, but Jefferson County, Alabama, which filed in November 2011, is still in bankruptcy. It is also unclear as to whether the city could (or would) sell assets like the Coleman A. Young International Airport, Belle Isle Park, or the collections in the Detroit Institute of Arts. Will Washington intercede? So far, they have claimed they will not.

The first thing the city must do is defend its right to declare bankruptcy. Kevyn Orr, Detroit’s emergency manager, was hired by Governor Rick Snyder last March. As such, he represents Detroit’s 700,000 citizens, but he is a bankruptcy lawyer by background, not a public servant. (He represented Chrysler in 2009.) He must prove that Detroit is insolvent and that he has negotiated extensively to reach a resolution with creditors, including the pension and healthcare boards and with bond holders. When the city’s pension boards threatened a lawsuit to prevent a bankruptcy filing, the consequence was a mad dash to the courthouse.

Bankruptcy is not pleasant, but it can be necessary. It must be seen as an opportunity, a chance to start over, to eliminate waste and to set a forward-looking agenda. It lets one be forgiven of one’s debt. Most important, it is an acknowledgement that the rights of taxpayers, who have been skewered by city managers, supercede those of city employees and bond holders. The bankruptcy of Detroit, the largest U.S. city to declare bankruptcy also sends the message that size does not immunize bad behavior – a mistake that was made with Dodd-Frank, which has allowed banks-too-big-to-fail to get even bigger.

But, by itself, bankruptcy does nothing to reform government, nor will it revitalize the city. It cannot reduce unemployment, bring down the crime rate or reverse depopulation. But in giving the city the chance to reset, it allows taxpayers to elect officials who will focus on growing the economy – lowering taxes, instituting a tax-free enterprise zone, adhering to the rule of law, endorsing proposals like James Q. Wilson’s “broken window” to help clean up neighborhoods, and aggressively prosecuting miscreants, including those in public office. Mayors’ like Rudolph Giuliani in New York, Stephen Goldsmith in Indianapolis and, more recently, Cory Booker in Newark have shown that cities can be changed for the better, when they concentrate on ridding their city of organized crime, improving schools, sending welfare recipients back to work and improving public services.

A positive aspect of bankruptcy is that it should force markets to price bonds more realistically. It should cause unions to understand what is sacrosanct and what is not, and what is affordable and what is not. It should send a message to city managers that there are not infinite buckets of money available to squander on meaningless projects. It should send a message to public employees that they serve at the whim of the electorate. And it should cause taxpayers to take elections more seriously, in terms of whom they elect and what projects they are willing to fund, and to toss out of office those who persistently violate their trust. (It should not be lost on voters that during his twenty years in office, Mayor Coleman Alexander Young, for whom the airport is named, saw the population decline by 50%, unemployment double and poverty rate increase by 75%, yet was reelected Detroit’s mayor in four landslides. We get what we deserve when we vote!) Detroit’s plight should send a message to other cities like St. Louis, Cleveland and Philadelphia. It is a message that should not be lost in State Capitals, like Sacramento, Albany and Hartford, which have abused their roles as fiduciaries. Most importantly, the message of Detroit is a lesson for Washington, where money is treated as a renewable resource. What happened in Detroit can happen anywhere.

Wodehouse’s novels always end happily. It is possible that Detroit, like the Phoenix, could rise from the ashes that are a consequence of five decades of mismanagement and corruption. It is possible, but it will take a cultural, as well as an economic, renaissance. It may not be probable, but it is possible. The future will tell.

Monday, July 22, 2013

Protecting minority rights is an important responsibility of government. However, whether a filibuster is even relevant in doing so is a question that should be debated. Filibusters are used, almost exclusively, to protect the interests of the party out of power, preventing the controlling party from passing legislation deemed bad, or to prevent the President from making appointments unpopular with the minority. By themselves, and when used in moderation, filibusters are alright, but when they are used to hamstring the normal workings of Congress and government they cause more harm than good.

A filibuster is a type of parliamentary procedure where debate is extended, allowing one or more members to delay, or entirely prevent, a vote on a given proposal. It is a form of obstruction, which again is okay when used sparingly. Interestingly, and perhaps relevantly, the English word derives from the Dutch, vrijbuiter, which means “privateer, pirate, robber.” One might argue that the word has assumed its original meaning.

I am not a lawyer, so my information may be wrong, but according to an article in the Washington Post published a year ago, the Constitution proscribed only five instances that would require more than a majority vote: Impeaching a President; Expelling members; Overriding a Presidential veto or order; Ratifying treaties; and Amending the Constitution. Everything else was expected to be approved by a majority vote. In the same article, Atlanta lawyer Emmet Bondurant, stated that the concept of the filibuster was born in 1806 when the Senate voted to delete a provision called the “the previous question” motion. The idea being that, as all Senators were considered gentlemen, they would know when to stop talking. As we know today, and not just because of their gender, most Senators do not act like gentlemen and most do not know when to stop speaking.

In early years, the filibuster was used sparingly – sixteen times between 1840 and 1900, but during that time there was no rule for cutting off debate. Thus, in 1917, at the urging of President Wilson, the Senate adopted the modern-day “cloture” rule, which allowed for two-thirds of the Senate to end a filibuster. In 1975, with Democrats in control of the Senate 60-38, the threshold for cloture was reduced to three-fifths, or, conveniently, 60 votes. That stands today.

As politics have become more polarized, filibusters have become more common, but as they have become more common, they have become less powerful, because it is easier to break a filibuster through cloture. Thus, while popular, they have become less effective. They do, though, reflect the acrimonious divide in the Senate. According to the Senate Historical Office, motions to end debate through cloture were used 130 times during 2003-2006, when Republicans were in control, and 276 times during 2007-2010, when Democrats ran the Senate. The trend has persisted. The party in power consistently bemoans the degradation of Senate decorum due to filibusters, but doesn’t want to give up the option, as they know that at some point in the future they will become the minority party.

Which is the chicken and which the egg is not clear, but increased filibustering has certainly aggravated an already fractured Senate. That should not be the case. As Americans, we are unique among nations in that we have grown to prominence, not as a colonial empire, nor as part of a commonwealth, nor even as a nation with a common heritage, but as a free and independent country – an amalgamation of mixed races and creeds – a melting-pot, to borrow a phrase. Certainly, we have tensions: Race, immigration, a wealth gap, cronyism – the list goes on. As President Obama noted in his White House speech Friday on race, many prejudices are deeply embedded in our culture, and answers will only be found over time.
But, I thought the President missed an opportunity to expand on the subject of race, and he is the only President we have ever had that could. He did say we cannot retreat into our respective corners and that we should all soul-search on matters of race. But, he could have been more open and honest about the deleterious role politics has played and the effect it has had on our culture. Racial profiling is not healthy, yet isn’t that what affirmative action does? Racial profiling is effectively a form of implicit segregation, yet isn’t that the consequence of political compartmentalization? Both political parties are guilty of doing the latter; for it simplifies attempts to appeal to different sectors – the young, single women; soccer moms, African-Americans; environmentalists; the Hispanic community; Chinese-Americans, etc. (I could add old white men, but I find very few politicians who actually seek me out!) We are sliced and diced into small sectors, each a specific target – and each, ironically, a form of segregation.

With an emphasis on segregated components of society, we risk losing the melting-pot aspect of our culture. It is, to borrow an old adage, an example of missing the forest for concentrating on the trees. I wish the President had used the words “personal responsibility” in his speech. We are all, including Mr. Zimmerman and Mr. Martin largely responsible for the actions we take and the consequences that ensue. There are, of course, exceptions – acts of random violence, accidents and luck – over which we have no control. There is no question that Mr. Obama was telling the truth when he said that as a youth he could not walk through a department store without being eyed, or that he had heard the clicks of door locks when he walked by parked cars. But he also could have used the podium to speak of the importance of education, of working hard, of not committing petty thievery, or defacing private or public property. He could have reminded people that we are all held responsible when we stray from laws and customs. He could have spoken of the importance of families – his own, for example provides a model to be emulated – and that when families disintegrate, it is the children that suffer; and when our children suffer, so does society.

When Mr. Obama proposed as a solution “racial sensitivity training for police and other peace keepers,” he could have added that we must all have respect for one another, in order that we may achieve self-respect. In short, he could have used the moment to seize on the importance of self-reliance and aspiration – that success and dependency can never go together. While Mr. Obama spoke of how Trayvon Martin could have been him thirty-five years ago, he was speaking stereotypically, not in terms of character. He could have emphasized the latter as being more important to all people, regardless off ethnicity, creed or race.

The political compartmentalization of our society serves as a red herring to avoid focusing on structural weaknesses. The most damaging aspect of too much government interference in our daily lives is an increased dependency and a decreased sense of personal responsibility. As a dependent people, we are less able to fend for ourselves. We see the consequences in a healthcare system that had its genesis in the post-War era where, with wage and price controls in place, businesses competed for employees by offering benefits. We see it in a welfare system that has morphed into a lifestyle option. We see it in programs like affirmative action, where entitlements replace merit.

I worry about the gradual usurpation of executive power in Washington. Mr. Obama is only the latest in a long string of Presidents who have sought more power for the Executive branch, whether it is in the use of “Czars,” or empowering departments with the ability to implement rules that they have formulated, thereby bypassing Congress’s role as lawmaker. The office of President, as Theodore Roosevelt used to say, is a “bully pulpit.” It can be used to influence events by going directly to the people, but it should not be used to increase power by unilaterally making recess appointments, by simply declaring the Senate not in session. And it should not be used to empower the Department of Environmental Protection to penalize violators of laws never passed by Congress. In part, I suspect it is this growing influence of the Executive branch that has caused whichever party is on the outs, to make use of filibusters. But, in my opinion, they are wrong. Obstruction is not legislation. As Thomas Dolan wrote in last weekend’s Barron’s, “The threat of elections is better than the threat of a filibuster.” He added, “Ending the filibuster would help new Senators repeal unpopular legislation, and that would force constructive compromise more effectively than the current rules.”

While we are a nation of individuals and we come from myriad backgrounds, races and creeds, it is our commonality as Americans that should be promoted. We must better understand our history and that of other nations to fully appreciate the good fortune that is ours. Nothing is perfect, nor will it ever be. There will always be those who need help; there will always be those who have criminal intent. But we must learn to understand that we are responsible for the consequences of the choices we make, and that the opportunity for success is ours, but that it takes aspiration and diligence. When we elect a President, Senate and House, we have spoken. One of the consequences should be that those we have elected should be able to pass legislation and make appointments with a majority vote. (If Republicans are concerned about always being a minority party, they should become more aggressive in terms of encouraging immigration. Pro-growth policies, incorporating more open and robust strategies toward immigration, would serve them well.)

Filibustering needlessly and endlessly serves no one well, and the cloture that is used to close debate almost always results in personal recriminations. It is time, in my opinion, to abandon the filibuster in its current form. Congress, as well as individuals, must learn to live with consequences of elections. While respecting those that differ, a President is in a unique position to unite the country. That should be the goal. Divide to conquer may be an appropriate military tactic, but it rarely works for a President, and has certainly abetted partisanship in Washington. And, we should keep in mind that none of us is entitled, except to live freely under the law. But that, as a study of history will inform, is a very great gift. Unfortunately, it is not one much appreciated any more.

Friday, July 19, 2013

“Pervert” may be the wrong word. While it certainly fits Anthony Weiner, “hypocritical creep” may better define Eliot Spitzer. So what, some may ask, if a guy wants to flash his manhood over the internet to some young women, or another guy chooses to be serviced by prostitutes? Would that make the first a bad mayor or the second a poor comptroller? We cannot know, but such actions are indicative of poor judgment and suggest both men are ethically challenged. They reflect their character, and not in a positive way.

It is not as though there is anything unique about deviant or aberrant politicians – scandals are as common to the political arena as black flies are in June in New Hampshire. Power is an aphrodisiac to some women and has a corrupting influence on many individuals that exercise it. Because of a twenty-four hour press and wide access to TV and the internet, anyone who chooses public service as a career understands that fame/notoriety comes with the job. In many cases, it is love for the limelight that leads them to politics. As a politician, what one does and says becomes part of the public domain – not because what they do or say is particularly interesting, but because there are cameras and microphones everywhere. There is no privacy. However, as public officials they should understand that they set standards that are emulated by their constituents and others. They have a responsibility that extends beyond their personal preferences. It is the loss of that sense of moral responsibility that I find troubling and which grows stronger when men like Anthony Weiner and Eliot Spitzer use their name recognition to propel them back into public life. It is also why so many talented individuals no longer seek careers in public service.

There are cultural differences today that did not exist yesterday. Discretion has been replaced with a claim that we should be more open about our desires. It is thought to be more honest, but too often serves as an excuse for voyeurism. Personal aggrandizement has replaced a sense of selflessness. And, of course, in our fear of imposing our standards on others, we have become moral relativists. Simple concepts, like honor, self-respect and respect for others, personal responsibility, pride in work, self-sufficiency and aspiration have disappeared down a cultural sinkhole for too many of our citizens, led there by amoral elites that run our country and a media that too often feeds on deviants. The cultural problem goes beyond kinky sexual exhibitions. There is less value placed on work and self-sufficiency. The safety net that was welfare has become a source of income. Schools are there to provide good incomes and benefits to teachers and administrators, not to educate the young, especially the underprivileged in inner cities. This dumbing down of American culture was clearly manifested in the highly embarrassing interview CNN did with Trayvon Martin’s girlfriend, Rachel Jeantel. As a 17-year-old in the Miami-Dade County school system she showed herself unable to speak intelligibly or to even read a letter she had purportedly written, “I don’t read cursive.” It explains, in part, why African Americans live in such hopeless poverty, and it also in part explains why social and economic mobility in the U.S. lags that of Canada and most of Western Europe. The fault is not theirs; it is society’s.

Passing judgment on anyone’s indiscretions or transgressions carries risk, though that has never stopped faux moralists like Mayor Bloomberg or former Vice President Al Gore. But for the rest of us, are we willing to be judged by the standards we assign to those with whom we disagree? Of course, given President Jimmy Carter’s definition, we are all (or certainly I am) adulterers: “Anyone who looks on a woman with lust has in his heart committed adultery.” His standards, though, are higher than most. I have a greater problem with the sending of photos of one’s genitalia to young women, than visiting hookers. The former is just plain weird and for which there is, in my opinion, no excuse. Mr. Weiner should be seeking psychiatric help, not the office of Mayor of New York. Mr. Spitzer showed poor judgment and a lack of respect for his spouse; it expresses a personal problem that he needs to work out between his wife and family. Hypocrisy may prove rampant in Washington, in New York’s City Hall (and in the writings of pieces such as mine.) But we should remember that character counts, or that it should, and that is particularly important in those we choose to represent us in government.

As much as anything, it is character we want in our leaders. Character, by which I mean honesty, reliability, integrity and responsibility, is virtually non-existent among many of those who opt for public service. It was once deemed important. When J.P. Morgan was asked, what is the best collateral for a bank loan? He replied “character.” Abraham Lincoln said, “Nearly all men can stand adversity, but if you want to test a man’s character, give him power.” “Whoever is careless with the truth in small matters cannot be trusted in important matters,” said Albert Einstein. It was the key word in a sentence uttered by Martin Luther King in his “March on Washington Speech” fifty years ago next month: “I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin, but by the content of their character.” The word is missing in most speeches today. Fifty-three years ago, President Kennedy spoke at his inaugural: “Ask not what your country can do for you, but what you can do for your country.” Things have changed. From a politician’s perspective today, it is all about promises. From the constituents’ perspective, it is what can government do for me?

The United States was built on the concept that anyone could come here and succeed. If they were smart and worked hard they could do well. It was a system that relied on personal initiative; it required desire to better oneself, and success depended on a willingness to work hard. Those traits represent a disappearing ethos. How have we come to this pass? In my opinion, its principal cause has been a cultural decay. America was always seen as a land of opportunity. Unlike countries from which immigrants emigrated, we had no class system. Success was determined by merit and aspiration. Working hard allowed one to rise both economically and socially. There was no instant gratification. Investment in labor and money was necessary, which often meant personal deprivation in one’s early years.

A consequence of our subsequent cultural decay is that economic and social mobility is no longer as prevalent as it once was. In fact, in that regard, we lag Canada and most of Western Europe. The welfare system was created with the best intentions, to protect people from starving to death, to provide relief in times of extreme need. It was supposed to provide a source of temporary income until the recipient could get back on his or her feet. It was never intended as an alternative life style. It has had the unfortunate consequence of reducing aspiration and its benefits are such that people can do better on welfare (assuming they have no ambition) than if they were to take a menial job, or even a job paying average wages. It has fostered a reduction in the sense of self respect and has made it harder to climb out of poverty and dependency. And our schools have been of little help. They have widened the gap between the haves and have-nots, they have made more difficult the climbing the ladder of success. In keeping people imprisoned in uneducated poverty, our society is depriving a broad chunk of society, especially African Americans, the opportunity to fully participate in the American dream. Without self-respect, there is no success.

I have wandered off the reservation of perverts in politics, but I believe that their presence is due, at least in part, to what I see as a moral decay in the culture of our country. Too often government emphasizes dependency over responsibility. We put too much emphasis on winning, regardless as to whether rules have been broken. Bankers on Wall Street took taxpayer money and used it to pay bonuses. Banks too big to fail have less concern about the consequences of risky behavior, because they know government will backstop debilitating losses. We allowed Congressmen like Barney Frank and Chris Dodd to essentially bring down Fanny Mae and Freddie Mac, by requiring that they provide loans to individuals with no ability to pay back. In the aftermath, they took no responsibility for what they had done. The political system cares more about the voting bloc than the individual. In a world where people can not only survive without working but do well, aspiration fades. A lack of personal responsibility breeds dependency. Self-reliance is necessary for self-respect; when we ignore the former, we lose the latter.

If there was a genesis for this essay it was the op-ed by Peggy Noonan in last weekend’s Wall Street Journal, “How to Find Grace After Disgrace.” She told the story of John Profumo, Britain’s Secretary of War, who was caught in a sex scandal fifty years ago this summer. He was a young man in his 40s with a bright future. But once caught he chose to “go away, really away.” He believed, as Ms. Noonan wrote, “in remorse of conscience – because he actually had a conscience.” He never knew political power again, because he never asked for it. He didn’t write a book. He didn’t go on talk shows. He made no money. He went to Toynbee Hall in the East End of London where he did social work, starting by washing dishes and cleaning toilets. Over time he became president of Toynbee Hall, staying there forty years. The only interview he gave was on his 40th anniversary at Toynbee. When asked what had he learned doing social work, he answered “humility.” He died in 2006 at the age of 91.

It is hard to imagine Mr. Spitzer choosing such a path, or Mr. Weiner bowing out from the public eye. They are both, in part, responsible for our cultural decay and they are victims of it. And we (and they) are all poorer for their continued participation in the political process.

Wednesday, July 17, 2013

Very few crimes have been as prejudged by the press and politicians as was the killing of Trayvon Martin by George Zimmerman on February 26, 2012. Zimmerman was described as a “white Hispanic” and the 17-year-old, six foot, 170 pound Trayvon Martin as a child. (Can you imagine the media referring to Carlos Correa of the Houston Astros as a child, or the outcry if someone described Barack Obama as a white African American?) Judge Debra Nelson even allowed the prosecution to have the jury consider lesser charges of manslaughter and child abuse to secure some kind of punishment. Yet, despite enormous pressure, from protestors to the press to politicians, a jury of six women took only two days to find Mr. Zimmerman innocent of all charges. The jurors did not follow the path of least resistance, which would have been to convict. They let the facts speak. There appeared to be reasonable doubt. The system worked.

In the immediate aftermath, a year and a half ago, the killing became a cause célèbre. The NAACP jumped aboard, as did the American Civil Liberties Union and New York Representative, Charlie Rangel, along with the Reverend Al Sharpton, Jesse Jackson and a host of others. But, from a perspective of political decorum, worst of all was President Obama’s weighing in: “If I had a son, he’d look like Trayvon.” Mr. Obama is a lawyer with a Harvard education. He is supposed to be the “smartest man in the room;” he is described as “cool,” not quick to judgment. Yet he has a history of speaking out on legal cases before all the evidence is in. Either he forgets that as President of the United States his words have exceptional influence, or he is willing to fan the flames of racialism for political purposes. When Harvard professor, Henry Lewis Gates was arrested at his own house for house-breaking, he said the Cambridge police acted “stupidly,” but then added: “Skip Gates is a friend. I don’t know all the facts.” He didn’t know the facts and his comment was neither “smart” nor “cool.”

Mr. Obama can’t seem to help himself. As the New York Times noted on Sunday, the President recently commented on sexual assault accusations in the military. He said that those who commit such crimes should be “prosecuted, stripped of their positions, court-martialed, fired [and] dishonorably discharged.” Defense lawyers for those accused, according to the front-page article, pointed out that, as commander in chief, Mr. Obama’s words amount to “unlawful command influence.” The Times quoted Thomas J. Romig, a former judge advocate general and dean of the Washburn University School of Law in Topeka, Kansas: “His remarks were more specific than I’ve ever heard [from] a commander in chief. When the Commander in Chief says they will be dishonorably discharged, that’s a pretty specific message.”

In fairness to the President, after the verdict was announced he spoke: “We are a nation of laws, and a jury has spoken.” He urged “calm reflection.” That was proper. But damage had been done. We should not forget that early on the Administration used taxpayer money to finance local activists who called for Zimmerman’s arrest. As Thomas Sowell recently wrote, “[Zimmerman] will probably never be safe to live his life in peace.”

The initial response from the police in the Trayvon Martin shooting was that there was not enough evidence even for an arrest, let alone a conviction. The decision of the jury vindicated that assessment. But the failure to immediately arrest Mr. Zimmerman, despite laws protecting the innocent, resulted in a rush to judgment and a number of things happened: The chief of police of Sanford was fired; Governor Rick Scott removed the local prosecutors and appointed State Attorney, Angela Corey to handle the case. And the defendant had to spend sixteen month wearing a bullet-proof vest while “filled with fear and trauma,” according to his defense attorneys. Keep in mind, George Zimmerman’s home address was made public by Spike Lee. Since the verdict was announced, the Left has called for the Justice Department to file federal criminal charges against Mr. Zimmerman.

Segregation and the concept of “separate but equal” were blights on our character as a nation. They existed far too long and their effects are still with us. It is easy to forget, but during World War II African-American soldiers and sailors were segregated from their white comrades. In Citizens of London, Lynne Olson noted that there were 100,000 Black servicemen stationed in England, which unlike the U.S. did not practice segregation. It caused much dissension, with white Americans almost always assuming the role of the bad guy. The English often found white soldiers impolite and even obnoxious. Ms. Olson quotes one Brit: “I don’t mind the Yanks, but I don’t care much for the white fellows they brought with them.” Persecution persists in this case, but it is now Zimmerman who is the victim. Understandably, we associate lynchings with red-neck southerners stringing up African-Americans, as that was a too-frequent occurrence in the pre-civil rights South. However, that same unlawful, abhorrent attitude can happen to anyone. Prejudice and bias know no race, sex or creed. Ironically and perversely, Mr. Zimmerman has become a victim of racial hatred. It makes no difference if one considers him a frustrated “wannabe” cop or a racial profiler, the defendant is now the accused.

Refusing to accept the verdict in Sanford, Florida, protestors are out again, energized by ministers decrying from their pulpits the lack of justice, goaded by speeches from the Reverend Al Sharpton and Jesse Jackson and encouraged by politicians like Senator Barbara Boxer who sees this as a crisis to be exploited. The press, with an estimated 10 million people having watched the verdict, sees the episode as a media goldmine to be worked, with little regard for lives that may be destroyed. Never one to let an opportunity go to waste, Mayor Bloomberg entered the fray, vowing to fight laws such as Florida’s “Stand Your Ground” law. It makes no difference to the Mayor that Mr. Zimmerman’s counsel never used that law in his defense. “We’re all Trayvon Martin today,” said Charles Simmons, a 49-year-old carpenter, as quoted in Monday’s Wall Street Journal. Does Mr. Simmons really know what he is saying? As a father of three and grandfather of ten, I certainly hope that none of my issue emulates a young man who had been suspended from school, following arrests by Miami-Dade School District Police for “drugs, theft, graffiti and other delinquent behavior.” Like vultures attracted to carcasses, all these people are feasting on an unbearable tragedy. The victim and the accused are less important than the circus they have created. It is seen by opportunists as a chance to gain fame, win re-election, or sell advertising. Respect, decency, empathy, personal honor appear as anachronisms. It is capitalism and democracy at their worst.

Lost in the rhetoric of political correctness that permeates much of the commentary is the uncomfortable fact that African Americans commit a disproportionate number of violent crimes. They represent about 13% of the population, yet commit about 50% of murders, and over 90% of African Americans that are killed are done so by other African Americans. Fifty years ago in St. Louis, Martin Luther King noted that Blacks comprised 10% of the population of the city, yet committed 58% of its crimes: “We’ve got to face that. And we’ve got to do something about our moral standards.” As Jason Riley wrote in Tuesday’s Wall Street Journal, “Civil rights leaders today choose to keep the focus on white racism instead of personal responsibility, but their predecessors knew better.” As America’s first African American President, Mr. Obama has done little to address this fundamental problem, which is rooted in accountability and personal responsibility. Mr. Riley quoted the late Harvard Law professor, William Stuntz: “High rates of black violence in the late twentieth century are a matter of historical fact, not bigoted imagination.” Where is the outrage, Mr. Obama, over Black on Black crime?

Writing in USA Today a year ago, DeWayne Wickham noted: “More blacks were murdered in the USA in 2009 alone than all the U.S. troops killed in the Iraq and Afghanistan wars to date.” And 93% of them were killed by other blacks, which mean they do not register on the “racial conflict meter.” Poverty in inner cities and inadequate education are part of the cause, but assuming a moral code that incorporates personal responsibility must be part of the answer. An effective approach has been the adoption of James Q. Wilson’s “broken window” policing techniques – the idea being that people take pride in their neighborhoods when they are kept in repair, but they must do so themselves, not rely on some government agency.

Because there were no eyewitnesses we will never know what actually happened that tragic night in Sanford, Florida. Sympathy, understandably, lay with the victim. But, as Harvard Law professor Alan Dershowitz has said, reasonable doubt suffused the trial. Who started the physical encounter? Who threw the first punch? Who screamed out “help me, help me”? Who was on top; who was on bottom? No one knows. Juries cannot convict when reasonable doubt is so prevalent. Fifty years ago, Zimmerman would probably never have been charged, the case would have been ignored and Trayvon Martin would have been forgotten. We have come a long way, but balance must be restored to our moral sense. In a matter of moments, one life was snuffed out. Over several months, a second has been destroyed. A jury deliberated and concluded that the accused in the first instance was innocent. As for the second life that has been destroyed, blame rests on politicians, including the President, and on a media who sensed manna from Heaven in increased viewership and readership. Will any of the latter atone? I thought not.

In the same Times article noted above, the journalists quote Benjamin Crump, a Martin family lawyer. He asked supporters to keep the peace and he read a Twitter post by Dr. Bernice King, Martin Luther King’s daughter: “Whatever the Zimmerman verdict is, in the words of my father, we must conduct ourselves on the higher plane of dignity and discipline.” Her words express a wisdom sadly missing from today’s leaders. Unfortunately, politics have become more divisive and we have become less civilized. But the decision in Sanford was an indication that the rule of law still holds, at least in our courts – that a trial by jury is a proper replacement for private vengeance. If only our political leaders agreed.

Monday, July 15, 2013

Thought of the Day
“Trains and Pipelines – Be Careful What You Wish For”
July 15, 2013

It is the human tragedy of horrible accidents that gets our attention. We are a sensitive species and respond emotionally. It is why tabloids put bloody photos on their covers and why rubber-neckers on a highway often cause worse accidents than the one they are viewing. It is a natural instinct. In Meditations 17, John Donne wrote: “Any man’s death diminishes me, because I am involved in mankind.” Death affects us. Nevertheless, the tragic train derailment in Quebec a little more than a week ago has consumed less press than one might have expected. Why? Perhaps because it happened in Canada, but more likely because it did not fit the narrative the Left has been telling about the risks of carrying crude through pipelines, not trains.

A little after 1:00AM on Saturday, July 6, the center of the small Quebec town of Lac-Mégantic was destroyed. A train carrying 72 carloads of North Dakota shale oil went off the tracks in the center of the lakeside village. It was on its way to the Saint John Refinery in New Brunswick. The cause appears to have been human error. The train carrying the oil had stopped at its regular overnight stop, about six miles outside of the town. The location is on a slight, downward-sloping grade that leads to the village. Handbrakes had been set, and one of the five locomotives was left running to power the airbrakes. The locomotive caught fire, which was extinguished in about 45 minutes. But in doing so, the engine was switched off to avoid the fire spreading. That act caused the airbrakes to no longer function. In retrospect, it seems obvious that a second engine should have been turned on, so the airbrakes would work and that an engineer should have stayed at the sight. The handbrakes were incapable of holding the weight of the 72 cars filled with crude, and the train began to move on its own, gathering speed as it traveled toward the village. With no one at the controls, the train was moving too fast to handle a curve in the tracks in the middle of the village. It derailed. The ensuing explosions destroyed at least thirty buildings, including flattening the Musi-Café, which typically, according to news reports, would have had 50 or so patrons at that time. As of Friday at least fifty people were missing or dead.

Oil independence has been a goal for both political parties since the oil crisis in 1973. Our Middle East foreign policy has been dictated for decades by our energy needs. However, recent technological developments in horizontal drilling and fracking have noticeably increased the supply and production of North American crude. A report earlier this year from Citigroup suggested that in five years we would no longer have to import oil from any country other than Canada, and that in a “matter of years” the U.S. could be an exporter, instead of one of the largest importers. Oil, though, once extracted, must be shipped to refiners. The cheapest and safest way to do so is through pipelines. In light of the devastating explosion in Quebec, the irony for environmentalists is that they have spent the past few years lobbying, not for safety of train transportation, but against the Keystone XL Pipeline, designed to bring crude from Canada and North Dakota to refineries on the Gulf of Mexico. Consequently, trains have been increasingly used to ship crude.

Most of us give very little thought to how much we depend on energy in our daily lives and how much we expend to do so. From refrigeration to cooking, from driving a Prius to purchasing organic blueberries, from the clothes we wear to the books we read, energy is required. And no matter how much we may wish otherwise, oil, gas and coal will be the dominant fuels for the next several decades. Wind turbines require milling, which takes energy, and solar panels must be built in factories that consume electricity.

Most environmentalists refuse to acknowledge that progress has been made over several decades. A hundred and twenty-five years ago, in the town in New Hampshire where I grew up, most of the land had been deforested. Wood had been used as a fuel and forests were stripped of their growth. In the second half of the 19th Century, oil and coal began to replace wood; and the trees came back. When my wife was growing up in New York City, the common fuel for most apartments in Manhattan was coal. Soot in many parts of the City was a health hazard, but the desire to cook and be warm superseded the preference for cleaner air. Today, we not only keep warm in the winter, but cool in the summer, and the air we breathe is much cleaner thanks to oil and natural gas. When I got my driver’s license, the typical automobile got about ten miles to the gallon. Today, the average car gets 23 miles per gallon. With the recession, demand for oil in the U.S. has fallen, but the more important observation is that between 2004 and 2007, while the economy was growing robustly, oil consumption was flat. We have become more energy efficient for decades. Do we have further to go? Of course. There should be no stopping our pursuit for perfection. But one should not undervalue the strides that have been made.

The battle between environmentalists and economic progress has been epic for decades and, in my opinion, has been a positive contributor to our well-being. Our economy has grown, our standard of living has improved, our surroundings are cleaner and life is more pleasant. But success relies on a balance between economic growth and conservationists. As a rich people, it becomes easy to forget the costs we incur when we save a Red-Eyed Tree Frog or some exotic plant. In recent years, the intensity of environmentalists has been fueled by politicians who see them as a bloc capable of influencing elections. President Obama, in 2008, played soloist to their chorus when he arrogantly promised that his election would mark the moment when “the rise in the oceans began to slow and our planet began to heal.” But the Left does not like to admit success (and give up an electoral issue), or acknowledge improvements. Recent pollution is almost completely associated with developing economies. When one is poor, starving and cold, the fate of the Red Tail Hawk is low on one’s list of priorities. If and when emerging nations become richer, environmental concerns will assume more prominence. It is the natural order of things.

Economic growth has always been and always will be a trade-off between the physical comforts progress brings and the desire for a cleaner environment. While the accident in Lac-Mégantic – the worst in Canada in a hundred and fifty years – was tragic, we can never be accident free. We can simply make them as infrequent as possible, and that has been happening. Much has been written over the past few days as to how much more oil has been shipped by rail than five years ago. In 2008, 9,500 carloads of oil were shipped in the U.S. By 2012, that number surged to 233,811. Despite an increase of twenty-five times in rail shipments of U.S. crude, safeguards are better today than they were. There were eight spills in 2008. In 2012, there were sixty-nine – an increase of only 8.6 times. The reasons for the increase in rail shipments can be attributed first, to the happy fact that domestic (and Canadian) oil production has increased, reducing dependency on imported crude. Second, domestic oil production has increased faster than pipelines have been built. Delaying the Keystone XL Pipeline may not have led directly to the accident, but it didn’t help.

It is unrealistic, to argue, as did Frances Beinecke (president of the National Resource Defense Council) in Friday’s USA Today that we must cut our oil consumption to a level where there is no need for oil from the Tar Sands or the Bakken Shale. Her claim is that if we don’t take it, no one else will. That is emphatically untrue. Without new sources, crude prices will rise, perhaps ruinously. Alternatives are not yet ready. Her argument ignores the effects of depriving people of gas for their cars. It disregards the economic effect of shuttering factories; she makes no allowance for more expensive food, or the consequences of higher prices for clothing and homes. She should think of the effects of higher energy costs on the developing world. Ms. Beinecke should take a deep breath, think of the world as it is – the turmoil in the Middle East and its fragility as a source. She must ponder the effect of rising energy costs on emerging economies and the importance of oil independence to the U.S. She should consider how far we have advanced environmentally over the past several decades and think of the delicate balance that has been achieved between growth and the environment. We are richer and cleaner than we were thirty and forty years ago. And we shouldn’t deprive the emerging world of a chance to become richer.

Energy independence is critical to our future. We live in a globally competitive world. Our edge is technology, an entrepreneurial spirit and now abundant energy. Oil must be refined into products. That which is produced in the heartland must be shipped, either through pipelines or rail, to refineries, which are generally located on the coasts. Pipelines have proven to be safer and less expensive than rail, but preservationists have hindered their construction. That said we should be mindful, they are not without risk. But, then, nothing is. An environmental watchdog is critical in ensuring that corners are not cut by pipeline operators; nevertheless, we need them.

As we mourn the horrible loss of life in Lac-Mégantic, we must consider the role energy plays in all we do. I doubt that even Ms. Beinecke or Mr. Obama want to return to a pre-industrial age. We need growth; we would like a clean environment. As a nation, we have benefitted for decades from the conflicts between economic growth and the civilizing effects of environmentalists, but progress is evolutionary – too slow for many on the Left, especially for those who see this as a campaign issue. As the rhetoric gets hotter we risk losing what has been a positive symbiotic relationship. We can do a better job of anticipating problems and be faster in responding. We can always improve, but patience, in this regard, is a virtue. We evolve in the way we live. We always have. Those on the Left who think of themselves as enlightened and “smart” should be careful for what they wish – they risk killing the goose that has allowed this nation to not only prosper, but to become healthier as well.

Tuesday, July 9, 2013

“I dream of an Africa which is in peace with itself.”
Nelson Mandela (1918 - )
2000 Interview with “National Geographic”

The President’s week-long, $100 million trip to three African countries, while unusually expensive, served to highlight the promise of the continent, as well as the challenges it faces.

In a sense, we are all “out of Africa.” Central, eastern Africa has been widely accepted as the origin of humans, as evidenced by discovery of the earliest hominids and their ancestors, which date back at least seven million years. About 64,000 years ago, the exodus from Africa began and the world as we know it began to be populated.

It is a continent filled with contradictions. It is the second largest, both in size and population. It has some of the most arable land in the world, yet must import much of its food. Africa is home to some of the richest mineral deposits, from oil and gold to bauxite and manganese, yet it is the poorest continent. An estimated 50% of Africa’s population of a billion people lives on less than $1.25 per day. Wikipedia estimated that in 2003 the average poor person in sub-Saharan Africa lived on 70 cents per day, and was poorer than in 1973. Nine of the world’s ten poorest nations are African. Seychelles, Africa’s wealthiest country, is ranked 38th by the IMF on the list of richest nations. The continent is comprised of 54 fully recognized states and, according to UNESCO, at least 2000 languages; though 85% of the population speak one of fifteen languages. It is a place that has been exploited by European colonialists for its minerals, and served as a source for about eighteen million slaves over thirteen centuries, of which an estimated twelve million were sent to the new world during a four hundred year period.

It became common to describe Africa as the “dark” continent, a term ascribed to Henry Stanley of Dr. Livingstone fame. After a three year trip ending in 1877, Stanley wrote of his travels: Through the Dark Continent. The word “dark” was used to describe the mysterious nature of the land, a place largely unexplored when Stanley first visited Africa in 1871 in search of the explorer David Livingston. Even today, the continent conjures excitement and risk. In Out of Africa, Isak Dinesen wrote: “You know you are truly alive when living among lions.” While Africa does have nearly impenetrable jungles and dangerous animals, the word “dark” badly misrepresents a continent that spans the equator and includes some of the planets largest deserts, widest plains and most beautiful vistas.

In the two decades following World War II, European colonial powers vacated Africa. It had been the last area of the world to be colonized, which, with the exception of places like South Africa, did not happen until the final decades of the 19th Century. European imperialists, desirous of recouping their investment, were reluctant to give up their colonies. When they did leave, they left behind a vacuum, which, not unnaturally, was filled by militaristic dictators. During the quarter century from the early 1960s to the late 1980s, Africa experienced more than 70 coups and 13 presidential assassinations. Understandably, democracy has been slow to take root. Nevertheless, some progress has been made, despite periodic military coups, such as we have seen in Egypt this past week and Mali experienced last year. But democracy, while illusive, is still desired by most. Adam Nossiter wrote eloquently a year ago in the New York Times: “what remains constant is both the aspiration and discernment of the people…The ordinary citizens wanted a voice and seemed to know…that democracy was the best way to get it…Once glimpsed, democracy was vigorously fought for; once achieved, it was jealously guarded.”

Besides what appears to be a gradual shift toward democracy, Africa’s opportunities lie with its rich resources and its relative youth. Wikipedia reports that Africa holds 98% of the world’s chromium, 90% of its cobalt and platinum. It has 70% of its tantalite, a third of its uranium and 64% of its manganese. The continent holds 50% of the world’s gold and 30% of its diamonds. It is the largest exporter of bauxite, and a significant exporter of oil. Nigeria, Algeria, Libya, Angola, Egypt and Sudan are among the world’s thirty largest oil producers.

The median age in most of Africa is under 25. In contrast, the median age in the developed world (and China) is over 38. Youth, everywhere, provides the essence for future economic growth. Abetting its potential was the formation of the African Union (AU). Eleven years ago today, the Union was launched in South Africa. It replaced the Organization of African Unity and is comprised of all African nations except Morocco, which opposed the membership of Western Sahara as the Sahrawi Arab Democratic Republic. Among the AU’s objectives are: greater unity and solidarity between African countries; accelerating the political and socio-economic integration of the continent; promoting peace, security and stability on the continent, and promoting democratic principles and institutions. As Hamlet once said, “’Tis a consummation devoutly to be wished.” The AU’s headquarters are in Addis Ababa, Ethiopia and are housed, significantly, in a complex built by the Chinese, as a gift from the Chinese government.

But Africa has enormous challenges. There are at least 22 ethnic groups in Africa, comprised of at least 10 million people, but the total number of ethnic groups is estimated at 3000. There is no common language or heritage. Authoritarian governments outnumber democracies. While we know that the creation of an African Union is a good thing, Europe is exhibit A in the difficulty of promoting such a pact. While much has been done in limiting the spread of HIV/AIDS, healthcare remains a serious problem. Africa accounts for 90% of Malaria deaths. Deadly diseases like Cholera, Tuberculosis, Ebola and Meningitis infect millions of Africans every year. One in nine children dies before the age of five.

While the United States and the EU remain China’s largest trading partners, Africa’s exports to China increased more than sixty-fold between 1998 and 2010. In contrast, during those same dozen years trade with the U.S. increased five-fold. China’s share of African’s exports now account for 15%. According to a report from the Carnegie Endowment, China’s aid is more mercantilist, while the America’s is more humanitarian. There is irony in the fact that a Communist dictatorship in China seems more interested in encouraging economic growth in Africa than the United States. Our efforts are humanitarian, but often come across as atonements for decades of European colonialism. We appear conflicted. When in Johannesburg last week, President Obama, instead of celebrating the economic progress that had been made, warned of the continent’s future economic development on climate: “If everybody has got a car and everybody has air conditioning and everybody has got a big house, well, the planet will boil over…” We must continue humanitarian aid, but our focus should be on helping them grow their economies, not scaring them into staying as they are. To a large extent, pollution is a function of emerging nations struggling to become rich. How can we, in good faith, prohibit progress?

The future of Africa should be virtually limitless, if domestic politicians and world leaders allow it. Political and economic freedom are fraternal twins, born in a manger comprised of human rights and constructed under the rule of law. It is in our and the world’s interest to promote both. Africans are poor, not because of a lack of resources or labor, but because over the decades resources have been expropriated and labor exploited – first by colonialists and more recently by native corruption. The problems they face are the consequences of men. Nelson Mandela, who spent 27 years in a South African prison and who turns 95 next week, once wrote: “During my lifetime…I have fought against white domination and I have fought against black domination. I have cherished the ideal of a democratic and free society…It is an ideal which I hope to live for and to achieve. But if needs be, it is an ideal for which I am prepared to die.”

His words are ones that hearken to our Founders. In his recent book, Gettysburg, the Invasion, Allen Guelzo writes that Lincoln always sensed that America’s Declaration of Independence meant that “the most ordinary of people had been created with the same set of natural rights as the most extraordinary, that no one was born with crowns upon their heads or saddles upon their back.” Professor Guelzo quotes Lincoln in 1854: “Most governments have been based, practically, on the denial of equal rights of men.” “The Founders,” Professor Guelzo wrote, “had taken a different route. They made what he [Lincoln] called an ‘experiment,’ to see whether in fact democratic self-government was really a possibility.”

The African continent needs political systems that operate under the rule of law and legal systems that protect private property. They must encourage competition, and the responsibility that entails. They must respect the “unalienable” rights of their citizens. Their leaders must be held accountable for their decisions. But, as easy as those factors are to enumerate, they are difficult to implement and, as we are discovering in the United States, they can be hard to keep. Uniting a continent, as the Europeans are discovering, is hard to implement and difficult to maintain. The United States was a unique situation. While there were thirteen colonies, and while slavery, economies and size were differentiating factors, all of the Founders spoke English; they had a common heritage and colonial justice was based on English law. Yet it wasn’t until after the Civil War, eighty-nine years after Independence, that “these” United States became “the” United States.

Africa bears a much heavier burden. Culture, heritage, history, language are all differentiating factors that will not be easily overcome. In The Poisonwood Bible, Barbara Kingsolver wrote: “No other continent has endured such an unspeakably bizarre combination of foreign thievery and foreign goodwill.” But much of the “goodwill” has been confused with the concept of the “white man’s burden” – the perverted idea that white men knew better than natives as to what was right, and they hope that gifts will absolve their guilt.

The rest of the quote at the start of this piece from Mr. Mandela goes: “I dream of the realization of unity of Africa whereby its leaders, some of whom are highly competent and experienced, can unite in their efforts to improve and to solve the problems of Africa.” Amen. We can only hope. Using water as an [unlikely] analogy for Africa, the promise is steam, the challenge is ice. In the meantime, the river runs swift, cold and deep.

Monday, July 8, 2013

Thought of the Day
“Contraceptives for Women – Trivial Pursuit”
July 8, 2013

“Irresponsible men are now able to be even more irresponsible,” so said a young female friend after hearing that the Obama Administration had decided last week to press ahead with a rule requiring most employers to provide free insurance coverage of contraceptives for women. While many women support free contraceptives, my friend’s insight appears more prescient, despite Sandra Fluke’s notoriety. However, to me it seemed the commonplace crowded out the consequential.

There is much that is right about our healthcare system. People from all over the world come to America for the best care available. But there is almost much that is wrong. An estimated 45 million have no coverage. Most cannot afford it, but there are those, particularly the young and healthy, who choose not to pay for the premiums. And, there are those who do not buy insurance because they realize emergency rooms will rarely turn away a person in need. Overall, costs are out of line with outcomes. Costs for specific procedures vary depending upon where one lives. A June 2012 study by the Peter G. Peterson Foundation found that Americans spend more than twice as much per capita on healthcare as the average developed country. The tort system is manna for trial lawyers. Tort reform should prevent unlimited liability awards that raise costs for everyone, while causing sections of the country to be without an adequate number of doctors.

Since the end of World War II, healthcare has been seen as an entitlement. Immediately following the War, with wage and price controls in place, companies differentiated themselves by offering benefits, the most important of which was healthcare. However, in doing so an unintended consequence was unleashed. Dependency replaced personal responsibility, as individuals were provided the insurance to pay for doctors and hospital visits. Free markets fell victim to institutional bureaucracies. Worse, individuals are discouraged from purchasing personal health insurance policies, as they must be paid for with after-tax dollars, unlike employer-based health insurance, in which the premiums are tax deductible.

The simplest way to reform the healthcare system is to introduce the concept of free markets, at least to the extent possible, but consistent with the theme, “patient power.” There is no question that we all need insurance for catastrophic events – a devastating disease or a horrible accident. But when we provide insurance for low-cost, more commonplace services we unnecessarily distort markets, and raise the insurance costs for all. Having written that, I recognize that contraception is not inconsequential and that birth control is necessary. But the costs of birth control are not onerous for most. Planned Parenthood puts the costs of birth control pills at $15 to $50 a month.

There remains little doubt in my mind that Obamacare is a red herring to eventually nationalize the healthcare system. It is part of a deliberate plan to increase dependency on government, which definitionally means decreasing personal responsibility. “The Life of Julia” remains a vision of the future Mr. Obama prefers. Every voter should “Google” the title to see Mr. Obama’s vision of the future. It is Orwellian. By offering services such as free contraceptives that appeal to young women, Democrats assure their support. It is a divide to conquer strategy that has worked well for them politically, but doesn’t serve the state well, and certainly does little to foster responsibility and self-reliance. Knowing that much of Obamacare remains unpopular, last week the Administration delayed until after the midterm elections the implementation of a provision in Obamacare that requires employers with over 50 employees to provide coverage or pay a penalty. It is important to note, as Avik Roy (who once worked for our firm) wrote in Forbes last week, that “the administration is not delaying the individual mandate, which requires most Americans to buy health insurance or face a fine.” Delaying the employer mandate could ultimately lead, as Mr. Roy suggests, “to its repeal, which would do much to transition our insurance market from an employer-sponsored one to an individually-purchased one.” That would be a positive, unintended consequence of Obamacare.

The Declaration of Independence acknowledged that the people are endowed by “their Creator with certain unalienable rights, that among those are Life, Liberty and the Pursuit of Happiness.” It says nothing about material goods. Once we began guaranteeing goods and services, we entered a slope so slippery and steep that it knows no end. Niall Ferguson, in The Great Degeneration, writes about the rise and fall of social capital. He writes of how we once joined societies like the Rotary and Lions that brought together Americans of different income groups and classes. All of these social organizations are in decline. Over the past forty years, membership in chapter-based associations is down 50%. Charles Murray, in his 2012 book Coming Apart, makes the point that the decline in both secular and religious groups is a key driver in today’s social immobility and widening income inequality. The question becomes: Why do for others what government already does? But, when we don’t, we distance ourselves from our communities. In my own Connecticut village a few of us have begun a group to help the needy and dispossessed, not by directly funding their needs, but by helping them navigate the maze that is government, while learning to help themselves. It is independence we must encourage, not dependency. It is teaching people to fish, rather than giving them a fish.

The decline in social mobility is more insidious than the widening gap in income and wealth. Americans were always willing to live with a gap in wealth, because of a mobility that allowed them to move up and down the ladder of success. That has changed. In the June 26 issue of Newsweek, Niall Ferguson writes of the decline in social mobility in America, “The end of the American Dream?” Not only do we have a wide income gap, but social mobility appears to be less in the United States than in countries like Britain and Finland. He quotes Winston Churchill’s famous line about the Left favoring the line, while the Right opts for the ladder – lining up for benefits, or climbing a ladder to better one’s self. Ferguson writes: “Republicans need to start reminding people that conservativism is about more than cutting benefits. It’s supposed to be about getting people to climb the ladder of opportunity.” That means helping people truly in need, but with the focus of getting them back on their feet. It also means better schools that are focused on students rather than bowing to the demands of teacher’s unions. It means a return to the basics (history, science, literature and math), versus courses that specialize in narrowly-focused subjects like “women’s studies.” Over the past fifty years, per-pupil expenditures in public high schools have tripled, yet students are failing when compared to others in the OECD. According to the Council on Foreign Relations, three quarters of U.S. citizens are not qualified to join the military because they are physically unfit, have criminal records or have inadequate levels of education.

Friedrich Hayek in 1960 warned of some of the consequences of the welfare state, including the generational conflict we are now seeing manifested in the Affordable Care Act – the young and healthy being told to buy health insurance, or pay a penalty, so that even a reduced level of care is affordable to the elderly. And Obamacare can only survive with cuts to Medicare, The Independent Payment Advisory Board (IPAB), an authority adopted by Obamacare, has the ability to make further cuts to Medicare without Congressional approval. And, we should not forget that Congress voted to exempt themselves from the restrictions of Obamacare. Unfunded liabilities based on government promises are a dire concern. Obamacare will add to them. They threaten not only the federal government, but states and municipalities as well.

Earlier I wrote that, in my opinion, the actual intent of the Obama Administration is to ultimately have a single-payer (nationalized) system. The reason I believe that is because government is putting unrealistic demands on the insurance industry. Insurance companies employ actuaries to estimate future expenses. Insurance is a risk-based business, with customers and the company on the opposite side of the financial transaction. When we buy auto insurance it is not because we hope or expect to have an accident; it is to protect our finances against the unexpected. If we are fortunate and accident free, the insurance company wins. We, on the other hand, are out the costs of our policy; but we are also injury-free. The same is true in any form of insurance, including health. To survive, insurance companies must accurately predict their future liabilities. If they fail to do so, they will go out of business. If a health insurance company cannot predict possible outcomes because of incomplete data, how does it price his product?

As in any business, government should establish the parameters, define what they want to achieve and then invite insurance companies to bid for the business. There should be no prohibitions about bidding across state lines. Some people will want high deductible policies, others not. Some will pay a premium for platinum-like policies; others will opt for a basic plan. Tort reform should be imposed and courts should limit awards in class-action suits. Healthcare insurance should be individual-based, not corporate. Free markets work better than government-imposed ones.

While the United States has the best healthcare in the world – where do the world’s most powerful people, whether South American dictators, Middle East oil oligarchs, or the rich from Asia and Europe choose to come when very ill? – there are still problems, as we all know. The Affordable Care Act does little to solve the problem. James Madison, in Federalist 62, warned about laws that “are so voluminous they cannot be read, or so incoherent they cannot be understood.” The Bill’s focus on providing special services to particular voting blocs means it will be encumbered with trivialities. Contraception is symbolic of a non-serious response to an overwhelming problem. Such acts encourage dependency and decrease responsibility. Cuts to Medicare will harm the elderly, especially the poor and middle class. The Act sends exactly the wrong message to a country whose youth is going to have to compete across all borders, cultures and time zones. Government is the most extreme violator of misusing OPM (other people’s money.) While most politicians seem blind to the fact, there is only so much money that can be allocated to healthcare. Moneys spent in pursuit of the trivial means less available for the catastrophic. Besides, as my young female friend noted, do young men need any more excuses to avoid responsibility?

“In the truest sense, freedom cannot be bestowed; it must be achieved.”

Franklin D. Roosevelt

Most years, July 4th arrives hot and sticky. We celebrate with cookouts, going to the beach, playing softball, and watching fireworks in the evening. Since 1889, when my great great-grandfather noted in his diary: “children and grandchildren played baseball,” my father’s family has played softball at his home outside of Boston. It is pleasant and comfortable being with friends and family. But it is light years away from a similarly muggy day in Philadelphia when representatives of the thirteen states met 237 years ago.

We are a fortunate people who live in freedom, with little sense of how many have died to retain it and less knowledge of how difficult it was to forge. It is easy to take liberty for granted when we never had to fight for it. While we watch from afar street demonstrations in Cairo, Israel’s constant struggle for survival and a civil war in Syria, we should remember why we celebrate this day. The United States had its own Civil War, fought to hold together a nation rent by the abomination that was slavery, a denial of the very essence that all men are created equal.

Today marks the sesquicentennial of the major turning point in the Civil War – Gettysburg. Of the approximately 164,000 soldiers from both sides that took part, almost 8,000 were killed or died of their wounds in the three days of battle. Another 27,000 were wounded, and 11,000 were captured or missing. In Monday’s Wall Street Journal, Allen Guelzo, professor at Gettysburg College, noted that Lincoln heard of the victory on July 4th, which he saw as a “symbolic coincidence.” It was, Professor Guelzo says of Lincoln, as though a bright line had been drawn between the first time in 1776 when a new nation’s representatives declared as a “self evident truth that all men are created equal” and 1863 when “the cohorts of those who opposed that declaration that all men are created equal had turned tail and run.”

More than anything, July 4th represents the birth of a nation. In the summer of 1776, 56 representatives of about 2.5 million people from the thirteen colonies met in Philadelphia, which, at 40,000, was the country’s largest city. The Second Continental Congress, on July 2nd approved the newly written Declaration of Independence. Early on the morning of the 4th, church bells rang throughout Philadelphia, signaling that the Declaration of Independence had been adopted. The Boston Tea Party, Paul Revere’s ride, Lexington & Concord and Bunker Hill were all in the past. The crossing of the Delaware, the Battles of Monmouth, Brandywine, Charlestown and Yorktown would all be in the future. It would be seven years before the British would finally give up and sail for home.

A few weeks after the Declaration, 427 British warships carrying 1.200 cannon, 34,000 British and Hessian troops and 10,000 sailors appeared off Long Island and in New York Harbor. Facing the greatest army and navy in the world were Generals George Washington and Nathanael Greene, with about 5,000 ill-trained volunteer troops. The Revolution was about to begin in earnest.

The process toward independence had taken many years. It was not easy for most colonialists. Familial and business ties linked Americans to England. The French and Indian War – only 20 years earlier – concluded with Britain dominating the eastern half of North America. About half the residents of the American Colonies in 1776 were British by heritage. (Interestingly, but not surprisingly the second largest group were Africans.) Virtually all the signers of the Declaration of Independence were British. Being a member of the Commonwealth was seen by many as a positive thing. The British navy protected ships engaged in commerce and trade. The relationship was symbiotic. Englishmen and women served as customers for goods produced in America and were a source of supply of finer clothing, clocks and china.

Rebellion was a serious step. Had the Revolution failed, there is little question that all of the leaders would have been hung as traitors – their lives and their fortunes would have been forfeited. The decision to rebel was seen by Loyalists as an act of treason. For men of wealth – and most of the signatories to the Declaration were wealthy – the decision to join the Revolution was an all-or-nothing decision. Failure would mean death and penury for their heirs. It could not have been an easy decision. In his concise, readable and fact-filled short history, Revolutionary Summer, Joseph Ellis tracks the events from May to October, 1776. Professor Ellis shows how consensus was reached in the weeks before Philadelphia. The debates covered everything from the moral integrity of the revolution, to slavery, women, to broadening the electorate to include men without property. Benjamin Franklin cautioned against independence until after a new government had been formed. While New England was early to declare independence, it was only late in the process that Pennsylvania and New York endorsed the concept, with New York’s delegation voting in favor a week after the Continental Congress approved the Declaration.

John Dickinson of Pennsylvania was a reluctant revolutionary, as were many, especially in the Mid-Atlantic States. Gillian Tett, in last weekend’s Financial Times, wrote of a recent book, The Founding Conservatives: How a Group of Unsung Heroes Saved the American Revolution. These were men who were part of the elite, but who were determined to protect their privilege. They were not loyal to the crown, but they did not want to see the country fall into anarchy. Their enlistment was critical and much credit goes to John Dickinson who anonymously published “Letters from a Framer in Pennsylvania.” In them, he defended the concepts of liberty and freedom, but in the context of property rights, the rule of law and free-market capitalism. Mr. Dickinson, according to Ms. Tett, was considered the most trusted man in America. Once committed to the Revolution, in 1776 he penned:

Then join hand in hand, brave

Americans all!

By uniting we stand, by dividing

We fall.

The more one reads about the era – and tosses myths and stories overboard – the more it becomes apparent that it is not just a miracle we celebrate, but the extraordinary efforts by a small group of people who were able to convince the majority of the righteousness of their belief. As well, we must acknowledge that the leaders – Washington, Adams, Jefferson, Franklin, Dickinson, Madison and many others – knew full well that should they fail they would be hung as traitors. As it was, there were about 50,000 casualties, of whom about 8,000 died in combat. That may not sound like a lot over eight years, but keep in mind the population of the colonies was 2,500,000. A comparable number of dead and wounded today would be six and a half million.

But the consequence of their bravery and determination is that we live in the freest nation the world has ever known. Ronald Reagan spoke often of a “city on a hill.” It was an image recycled from Governor John Winthrop in 1630. Winthrop, in turn, borrowed the words from the Bible and Jesus’ Sermon on the Mount. In his farewell address in 1989, President Reagan described what he meant by those words: “…it was a tall, proud city built on rocks stronger than oceans…a city with free ports that hummed with commerce and creativity. And if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here.” It is an image to be remembered as immigration is debated in Congress.

Democracy can be fragile, ephemeral and inefficient. Democracy only works when people take an interest. It cannot be taken for granted. Complacency infects even the hardiest. An exacerbated Thomas Jefferson once frustratingly declaimed: “My God! How little do my countrymen know what blessings they are in possession of, and which no other people enjoy.”

Freedom is not free. It is demanding. “What we obtain too cheap,” wrote Thomas Paine in December 1776, “we esteem too lightly.” But it is, as Moshe Dayan once said, “the oxygen of the soul.” In 1779, Thomas Paine wrote: “Those how expect the blessings of freedom, must, like men, undergo the fatigue of supporting it.” As we enjoy our liberty, we must also be ever vigilant, especially regarding a government that trends toward dependency and erodes personal responsibility. In Man and Superman, George Bernard Shaw wrote, “Liberty means responsibility – that is why most men dread it.”

Nevertheless, the strength of the country has always been in its people and the knowledge that they will, when pushed hard enough, fight back and do the right thing. That has been the case for 237 years. The long-term survivability of our country depends on the Spirit of ’76 being alive in ’13. So whether you spend the day at the beach, barbequing with your family, or participating in a Coney Island hotdog-eating contest; or whether you are pitching a softball to the granddaughter of your second cousin, or sitting on the bank of the East River watching New York City’s fireworks, remember the reason you are able to do so. Think of those who died at Valley Forge, at the Alamo, Antietam, on San Juan Hill, at Belleau Wood, on Riva Ridge, Chosin Reservoir and the Battle of Hue. Remember those who continue to fight for our freedom – those who have fought and died in Iraq and Afghanistan and those who have been grievously wounded. It is because of them that we are at liberty to enjoy the freedom to picnic with our friends and family. None of those who died would want us to spend the day in mourning, but respect requires we think of them and that we honor the principle of freedom for which they fought, and be unafraid of the responsibility that comes from self-reliance.